Comparative Advantage, Relative Wages, and the Accumulation of Human Capital
AbstractI apply RicardoÃ¢ÂÂs principle of comparative advantage to a theory of factor substitutability in a model with a continuum of worker and job types. Highly skilled workers have a comparative advantage in complex jobs. The model satisfies the distanceâdependent elasticity of substitution (DIDES) characteristic: substitutability between types declines with their skill distance. I analyze changes in relative wages due to human capital accumulation. The concept of a complexity dispersion parameter or compression elasticity is introduced. Empirical studies suggest its value to be equal to two: a 1 percent increase in the stock of human capital reduces the Mincerian return by 2 percent. See the publication in Journal of Political Economy , 2005, 113(2), 425-461.
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Bibliographic InfoArticle provided by University of Chicago Press in its journal Journal of Political Economy.
Volume (Year): 113 (2005)
Issue (Month): 2 (April)
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Web page: http://www.journals.uchicago.edu/JPE/
Other versions of this item:
- Coen N. Teulings, 2002. "Comparative Advantage, Relative Wages, and the Accumulation of Human Capital," Tinbergen Institute Discussion Papers 02-081/3, Tinbergen Institute, revised 08 Apr 2005.
- D30 - Microeconomics - - Distribution - - - General
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
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